Job work
This query is : Resolved
28 November 2014
Dear Sir/Madam,
Ours is a animal feed manufacturing industry. We procure raw materials and give it to a processor who in turn manufactures and gives finished product to us, which is sold directly to customer. We pay processing charges to him which includes Loading and un loading charges and production charges. Our final product is NIL rate product (no excise duty is applicable). In this scenario, would there be any implications of Service tax and whether Service tax notification no.8/2005 would be applicable?
Ours is a animal feed manufacturing industry. We procure raw materials and give it to a processor who in turn manufactures and gives finished product to us, which is sold directly to customer. We pay processing charges to him which includes Loading and un loading charges and production charges. Our final product is NIL rate product (no excise duty is applicable). In this scenario, would there be any implications of Service tax and whether Service tax notification no.8/2005 would be applicable?
28 November 2014
As per negative list you are not liable to pay service tax being manufacturing activity.
If Central Excise duty is leviable on a particular process, as the same amounts to
manufacture, then such process would be covered in the negative list even if there is a central excise duty exemption for such process.
If Central Excise duty is leviable on a particular process, as the same amounts to
manufacture, then such process would be covered in the negative list even if there is a central excise duty exemption for such process.
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28 November 2014
If the above process amount to be manufacture then it is not liable to service tax as per section 66D i.e. the process should be mentioned in Central Excise Tariff Act 1985.
Otherwise it will covered under Service Tax
Otherwise it will covered under Service Tax
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29 November 2014
pls see the notification
Notification New Delhi, dated 1st March, 2005.
No. 8/2005-Service Tax 10 Phalguna, 1926 (Saka)
G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 93 of
the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central
Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts
the taxable service of production of goods on behalf of the client referred in sub-clause (v) of
clause (19) of section 65 of the said Finance Act, from the whole of service tax leviable thereon
under section 66 of the said Finance Act:
Provided that the said exemption shall apply only in cases where such goods are
produced using raw materials or semi-finished goods supplied by the client and goods so
produced are returned back to the said client for use in or in relation to manufacture of any other
goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), as
amended by the Central Excise Tariff (Amendment) Act, 2004 (5 of 2005), on which appropriate
duty of excise is payable.
Expalantion.- For the purposes of this notification,-
(i) the expression “production of goods” means working upon raw materials or
semi-finished goods so as to complete part or whole of production, subject to the
condition that such production does not amount to “manufacture” within the
meaning of clause (f) of section 2 of the Central Excise Act, 1944 (1 of 1944);
(ii) “appropriate duty of excise” shall not include ‘Nil’ rate of duty or duty of excise
wholly exempt.
[F. No. 334/1/2005-TRU]
(V. Sivasubramanian)
Deputy Secretary to the Government of India
you have to check the definition of manufacture . if it come under manufacture then you have to pay service tax. due to above said noti. not cover the NIL duty rate excise duty.
Notification New Delhi, dated 1st March, 2005.
No. 8/2005-Service Tax 10 Phalguna, 1926 (Saka)
G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 93 of
the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central
Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts
the taxable service of production of goods on behalf of the client referred in sub-clause (v) of
clause (19) of section 65 of the said Finance Act, from the whole of service tax leviable thereon
under section 66 of the said Finance Act:
Provided that the said exemption shall apply only in cases where such goods are
produced using raw materials or semi-finished goods supplied by the client and goods so
produced are returned back to the said client for use in or in relation to manufacture of any other
goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), as
amended by the Central Excise Tariff (Amendment) Act, 2004 (5 of 2005), on which appropriate
duty of excise is payable.
Expalantion.- For the purposes of this notification,-
(i) the expression “production of goods” means working upon raw materials or
semi-finished goods so as to complete part or whole of production, subject to the
condition that such production does not amount to “manufacture” within the
meaning of clause (f) of section 2 of the Central Excise Act, 1944 (1 of 1944);
(ii) “appropriate duty of excise” shall not include ‘Nil’ rate of duty or duty of excise
wholly exempt.
[F. No. 334/1/2005-TRU]
(V. Sivasubramanian)
Deputy Secretary to the Government of India
you have to check the definition of manufacture . if it come under manufacture then you have to pay service tax. due to above said noti. not cover the NIL duty rate excise duty.
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29 November 2014
Dear Sir,
Thanks for your reply. We provide raw materials to the processor and he produces the final product which is directly sold to the customers. In that scenario, it amounts to manufacture as no manufacturing activity is done at our end. You mean to say that in such a case, service tax will be applicable. It is the job worker, who has to pay it right?
Thanks for your reply. We provide raw materials to the processor and he produces the final product which is directly sold to the customers. In that scenario, it amounts to manufacture as no manufacturing activity is done at our end. You mean to say that in such a case, service tax will be applicable. It is the job worker, who has to pay it right?
30 November 2014
Please don't be confused, in present situation liability of Excise Duty can be arise i.e. it is manufacturing activity.
No liability for Service Tax can be arise if any process amount to be manufacture as per section 66D
No liability for Service Tax can be arise if any process amount to be manufacture as per section 66D
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01 December 2014
you are doing manufacturing activity not liable for service tax under negative list. Your product is also exempted from excise.
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